Twists and turns in the domain industry

Now that almost all new TLDs are operational and the dust begins to settle, we can start looking at some trends in the new dynamic domain industry. From a static industry with few players, we’ve gotten a large number of companies that see opportunities to establish themselves and sell their services.

There are many who just want a piece of the pie – but is there enough for everyone? At first glance, things look good. The number of registered domain names under the new top-level domains are growing steadily and are currently at 27.5 million domains. Not bad after 2-3 years.

China’s new hobby

If we dig a little deeper, the growth is primarily just within a few domains like .xyz and .top that almost give away their domain names. Another fascinating thing is that 43% of all registrations are made in China and 27% of the registrations are behind a proxy so that we don’t know who is the actual registrant.

Around 65% of all domain names under the new top-level domains are parked and approximately 10% are not in the zone file. So to summarize the picture we have found a new hobby with the Chinese – speculation in domain names. Something which Montenegro (.me) and Estonia (.ee) have also noticed.

The most interesting top-level domains that have actually been more successful are more in the range of 25-50,000 registered domains that hold a higher price.

Trade and procurements around TLDs

Something that was unthinkable a few years ago but that we have now is a lively market of top-level domains and administration of them. Here are some examples: .irish, .bio and .boston to clarify.

Besides the trade of top-level domains, there is also a permanent wave of contracts to win the opportunity to run other top-level domains. The year’s biggest was possibly the procurement of .org, which was won by Afilias, but one of the losers, Nominet (who runs .uk) could cheer themselves up as they got a deal to run almost 30 new TLDs.

Also, brand new players started establishing themselves as a back-end providers for the new top-level domains.

Top-level domains laid to rest

The last thing I’d like to mention is that many who applied for and got a top-level domain have decided that they don’t want to have it any longer. There are significant costs associated especially with the launch of brand name top level domains and some companies threw in the towel, such as .theguardian and .mitsubishi.

What will happen overall?

Probably within 2 years, the Chinese will have found a new toy and stopped collecting domain names. Speculation will not pay off in the long run and they’ll find something else. Thus, the growth of domain names in new TLDs will subside.

Many top-level domains will be sold at an ever-growing aftermarket and we will see periodic auctions and portfolio sales. Procurements for back-end providers and DNS providers will continue and lead to an ever-increasing competitive market with a negative price spiral.

About the blogger

Danny Aerts CEO, IIS
Danny Aerts is CEO of IIS since 2006. He is originally from the Netherlands and came to Sweden in the mid-1990s. Danny has worked at several telecommunications companies, such as Unisource Mobile, Telia, and PTT Telecom and as CEO of the internet portal Spray.

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